CFPB chief search complicated by GOP’s tenuous Senate hold

WASHINGTON — The statutory clock on Mick Mulvaney serving as acting head of the Consumer Financial Protection Bureau is under a year, but the administration's path to getting a full-time director confirmed by the Senate has never looked rockier.

Numerous names have already been floated for CFPB director, but the administration's tightrope walk in getting nominees through Congress was on full display last week when Marvin Goodfriend, a nominee for the Federal Reserve Board, lost GOP support, which appeared to put his confirmation in jeopardy.

Analysts say a similar political reality would complicate a CFPB choice. The GOP's razor-thin Senate majority became tighter — down to one vote — after Alabama Democrat Doug Jones' upset victory. Losing Republican votes could spell doom, especially with the availability of Sen. John McCain, R-Ariz., in question. The administration could look for Democratic votes to make up the difference, observers said.

Sen. John McCain
Bloomberg News

“They need to try to get nominees that can win at least a handful of Democratic votes. And if they can't do that, then they have to really be sure they have every Republican vote,” said Ian Katz, an analyst at Capital Alpha Partners.

Goodfriend's nomination to be a Fed board governor was approved along party lines by the Senate Banking Committee on Thursday, but reports quickly surfaced that Sen. Rand Paul, R-Ky., would oppose his nomination. With the health status of McCain a bit of an unknown, Goodfriend’s nomination could be blocked if Democrats hold firm and all vote against him. (Vice President Mike Pence holds a tie-breaking vote.)

“This underscores how thin the Trump administration's margin for error is on these nominations and how careful they need to be,” said Katz.

Goodfriend has expressed controversial views in the past and had a rocky nomination hearing. But CFPB director is an even higher-profile job and a nomination battle could be an even greater political flash point.

This could explain why the potential CFPB nominees whose names have been floated seem more moderate than Mulvaney, the White House budget director whose focus on reining in the agency and easing up on companies' burden has led to Democratic backlash. Mulvaney, meanwhile, cannot hold the job indefinitely. Under the Federal Vacancies Reform Act, his term as acting director cannot last longer than 210 days. (He was appointed in late November.)

Two names mentioned in discussions, Ohio state lawmaker Jonathan Dever and former Treasury official Dan Iannicola, have had a clearer focus on consumer protection issues than Mulvaney. National Credit Union Administration Chairman J. Mark McWatters, also said to be in consideration for the job, has the benefit of already having gone through the confirmation process, and he has been praised by a key lawmaker on the left, Democrat Elizabeth Warren of Massachusetts.

“You need to assume the CFPB director would need all of the Republican votes, and that means the nominee would need to be a known quantity, someone who is known to the Senate,” said J.W. Verret, a law professor at George Mason University and a former House Financial Services Committee chief economist. “Any unknown is not going to cut it.”

But that could mean nominating someone who may be open to stepping back from Mulvaney's approach, which has been popular among Republicans. Among other things, Mulvaney has shown a willingness to reopen CFPB rules, including its payday loan regulation, to make requirements more amenable to the industry.

“Any director that would have bipartisan support and really fight for consumers would make up the ground that Mulvaney has drastically done to try to reduce the bureaus work as much as possible,” said Scott Astrada, director of federal advocacy at the Center for Responsible Lending. He said such moves would include “implementing the [CFPB's] payday rule as it was promulgated."

Republicans narrowly defeated a CFPB rule that had restricted mandatory arbitration agreements in October, with Pence's tie-breaking vote making up for two Republican defections, by Sens. Lindsey Graham, R-S.C., and John Kennedy, R-La. But if the vote were held again today, the rule would likely have gone into effect as the Republican majority narrowed in December after Democrats seized the Alabama Senate seat vacated by Jeff Sessions.

For some observers, the fact that a CFPB nomination has not been put forward has been somewhat head-scratching, but there could be work being done behind the scenes.

The administration “can't count on getting much if any Democratic support ... so they had better make sure all the Republicans are on board. That's a lot of work and can involve negotiating and horse-trading, and it has to be time-consuming,” Katz said.

Ryan Donovan, chief advocacy officer at the Credit Union National Association, said prognostications on how a confirmation process would play out are still premature.

“It is hard to assess how difficult it is going to be to get a nominee through the Senate until there is a nominee,” he said.